EU to investigate anti-trust Internet music companies

But we've always controlled the market, say record companies

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The European Union is investigating whether the big five record companies' online music ventures are involved in anti-competitive activity.

Since the capitulation of Napster last week, the future of Internet music delivery has basically been put into the hands of just two companies: MusicNet, run by AOL Time Warner, EMI and Bertelsmann; and Duet, run by Sony and Vivendi. The two companies have also admitted they are in talks to one another.

For some crazy reason, the EU competition commissioner Mario Monti feels that by crushing other Internet companies with lawsuits and gaining control of not only the music but also its distribution over the Internet, the record companies may have been engaging in anti-competitive practices. Whatever gave him that idea?

It's not actually the fact that the companies have seized control of distribution that's the problem. It's that by working together to create an effective duopoly, they may be going against their own anti-competitive agreements. Internet music is unlikely to become cheap anytime soon - despite the fact that the cost of providing it for download is so low as to be negligible.

"These are important cases for the development of music services offered online to consumers and there are potentially a number of issues which merit close examination," Monti said. "Yes, online music services should develop rapidly, but with a diversity of service providers."

Monti gets our entire backing but, like the announcement yesterday that he will also be looking at DVD price-fixing, we aren't over-confident that anything will become of it. ®